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On choice of technique in the Robinson-Solow-Srinivasan model

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  • M. Ali Khan
  • Tapan Mitra

Abstract

We report results on the optimal "choice of technique" in a model originally formulated by Robinson, Solow and Srinivasan. By viewing this model as a specific instance of the general theory of intertemporal resource allocation associated with Brock, Gale and McKenzie, we resolve long-standing conjectures in the form of theorems on the existence and price-support of optimal paths, and on their long-run behavior. We also examine policies, due to Stiglitz, as a cornerstone for a theory of transition dynamics in this model. We present examples to show that (i) an optimal program can be periodic, (ii) a Stiglitz' program can be bad, and (iii) a Stiglitz production program can be non-optimal. We then provide sufficient conditions under which the policies proposed by Stiglitz coincide with optimal behavior.

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Bibliographic Info

Article provided by The International Society for Economic Theory in its journal International Journal of Economic Theory.

Volume (Year): 1 (2005)
Issue (Month): 2 ()
Pages: 83-110

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Handle: RePEc:bla:ijethy:v:1:y:2005:i:2:p:83-110

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References

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  1. Ferreira, Pedro Cavalcanti Gomes & Pessoa, Samuel de Abreu, 2003. "The Costs of Education, Longevity and the Poverty of Nations," Economics Working Papers (Ensaios Economicos da EPGE) 472, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  2. Costa, Carlos Eugênio da, 2003. "Risk Sharing and the Household Collective Model," Economics Working Papers (Ensaios Economicos da EPGE) 497, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  3. Souza, Leonardo Rocha, 2003. "The Aliasing Effect, the Fejer Kernel and Temporally Aggregated Long Memory Processes," Economics Working Papers (Ensaios Economicos da EPGE) 470, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  4. Cass, David & Stiglitz, Joseph E, 1969. "The Implications of Alternative Saving and Expectations Hypotheses for Choices of Technique and Patterns of Growth," Journal of Political Economy, University of Chicago Press, vol. 77(4), pages 586-627, Part II, .
  5. Dutta, Prajit K. & Mitra, Tapan, 1989. "Maximum theorems for convex structures with an application to the theory of optimal intertemporal allocation," Journal of Mathematical Economics, Elsevier, vol. 18(1), pages 77-86, February.
  6. Neri, Marcelo Cortes & Soares, Wagner Lopes, 2002. "Pobreza, Ativos e Saúde no Brasil," Economics Working Papers (Ensaios Economicos da EPGE) 465, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  7. Souza, Leonardo Rocha, 2003. "A note on Chambers's "long memory and aggregation in macroeconomic time series"," Economics Working Papers (Ensaios Economicos da EPGE) 503, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  8. Stiglitz, Joseph E, 1970. "Reply to Mrs. Robinson on the Choice of Technique," Economic Journal, Royal Economic Society, vol. 80(318), pages 420-22, June.
  9. Terje Hansen & Tjalling C. Koopmans, 1972. "On the Definition and Computation of a Capital Stock Invariant Under Optimization," Cowles Foundation Discussion Papers 313R, Cowles Foundation for Research in Economics, Yale University.
  10. Bardhan, Pranab K, 1971. "Optimum Growth and Allocation of Foreign Exchange," Econometrica, Econometric Society, vol. 39(6), pages 955-71, November.
  11. Souza, Leonardo Rocha, 2003. "Temporal Aggregation and Bandwidth Selection in Estimating Long Memory," Economics Working Papers (Ensaios Economicos da EPGE) 478, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  12. Costa, Carlos Eugênio da, 2003. "Normality Under Uncertainty," Economics Working Papers (Ensaios Economicos da EPGE) 496, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  13. Neri, Marcelo Cortes & Soares, Wagner Lopes, 2003. "Idade, Incapacidade e a Inflação do Número de Pessoas com Deficiência," Economics Working Papers (Ensaios Economicos da EPGE) 490, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  14. McKenzie, Lionel W., 2005. "Optimal economic growth, turnpike theorems and comparative dynamics," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 2, volume 3, chapter 26, pages 1281-1355 Elsevier.
  15. Mitra, Tapan & Wan, Henry Jr., 1986. "On the faustmann solution to the forest management problem," Journal of Economic Theory, Elsevier, vol. 40(2), pages 229-249, December.
  16. Costa, Carlos Eugênio da, 2003. "Optimal Taxation with Gradual Learning of Types," Economics Working Papers (Ensaios Economicos da EPGE) 499, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  17. Neri, Marcelo Cortes, 2002. "Brazilian Macroeconomics With a Human Face: Metropolitan Crisis, Poverty and Social Targets," Economics Working Papers (Ensaios Economicos da EPGE) 464, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
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Citations

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Cited by:
  1. Ferreira, Pedro Cavalcanti Gomes & Facchini, Giovanni, 2004. "Trade liberalization and industrial concentration: Evidence from Brazil," Economics Working Papers (Ensaios Economicos da EPGE) 531, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  2. M. Khan & Alexander Zaslavski, 2010. "On locally optimal programs in the Robinson–Solow–Srinivasan model," Journal of Economics, Springer, vol. 99(1), pages 65-92, February.
  3. M. Khan & Alexander Zaslavski, 2007. "On a Uniform Turnpike of the Third Kind in the Robinson-Solow-Srinivasan Model," Journal of Economics, Springer, vol. 92(2), pages 137-166, October.
  4. Monteiro, Paulo Klinger, 2004. "The set of equilibria of first-price auctions," Economics Working Papers (Ensaios Economicos da EPGE) 536, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  5. Ali Khan, M. & Piazza, Adriana, 2012. "On the Mitra–Wan forestry model: A unified analysis," Journal of Economic Theory, Elsevier, vol. 147(1), pages 230-260.
  6. Khan, M. Ali & Mitra, Tapan, 2005. "On topological chaos in the Robinson-Solow-Srinivasan model," Economics Letters, Elsevier, vol. 88(1), pages 127-133, July.
  7. Khalifa, Sherif, 2011. "Undiscounted optimal growth with consumable capital and labor-intensive consumption goods," Economic Modelling, Elsevier, vol. 28(4), pages 1673-1682, July.
  8. Tavani, Daniele, 2008. "Optimal Induced Innovation and Growth with Congestion of a Limited Natural Resource," MPRA Paper 11525, University Library of Munich, Germany.
  9. Khan, M. Ali & Zaslavski, Alexander J., 2009. "On existence of optimal programs: The RSS model without concavity assumptions on felicities," Journal of Mathematical Economics, Elsevier, vol. 45(9-10), pages 624-633, September.

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